Trading Basics

The market has 4 basic phases and no trading system is suited to all of them.
Some systems are suited to Phases 1 and 3, when the market is ranging,
while others are designed to trade the trends in Phases 2 and 4. Trend-trading
systems are more popular as they require less time and normally generate larger
returns.

Trading Trends

The object of trend-trading is to go long
at the transition from Phase 1 to Phase 2 and to exit before Phase 4. Some
models also short the market during Phase
4, but this should be left to experienced traders .

A Word Of Caution

These are typical steps that a trader will follow in
deciding what stocks to buy, when to buy them and when to sell. It is not a magic formula,
but consistent use should enhance your investment performance.

Trading methods can be compared to a carpenter's tools: Skilled use can
produce outstanding results but unskilled use may lead to injury. Learn to use
your trading tools properly before committing any capital. Study the behavior of
the indicators over
several years, learn their strengths and weaknesses and how they interact with each other and with the
market. Start with a small amount of capital and only increase this when you are
confident that you have a winning strategy.

How Good Is Your Market Analysis?
Compare our market views.

The weekly Trading Diary offers fundamental analysis of the
economy and technical analysis of major market indices, gold, crude oil and forex.